Shep Hyken\'s Customer Service Blog

Posts tagged "lifetime value"

In the past I’ve written about knowing the value of a customer or client.  By knowing how much business someone is worth, it can help make important customer-focused decisions. This story is an excellent example.

Someone, we’ll call him Bob, took his car to be serviced at one of the better know chain of auto service centers (large chain of stores in multiple cities).  The service and repairs were just over one hundred dollars.

Several days later Bob drove out of town on a family vacation.  Somewhere along the way the car broke down.  The problem was the same as the one that was just fixed.  Obviously, it wasn’t fixed.

Like so many of these auto repair and service stores, there was a guarantee.  The guarantee however was restricted to bringing the car back to the store, or another store in the chain, to be fixed.  However, Bob was two hundred miles from the nearest store.  So, reluctantly he paid for the repair.

When Bob returned from vacation he stopped by the repair center and told the manager that he had to pay for the same repair a second time.  As mentioned, the company’s policy on guarantee/warrantee work was to have the vehicle brought back to one of their stores.  So, what did the manager do?

He credited the customer for the next time.  Bob was delighted!  By the way, Bob was expecting a fight.

First, the manager knew Bob had been doing business with his store for years.  This hundred or so dollars was a small percentage of all of the business Bob was worth.

Second, the manager just didn’t pay out the money.  He issued a credit.  This means that the only way Bob could get his money back was to return.  The manager didn’t argue or question Bob.  He just took care of him.  The credit toward future service was a reasonable way of giving both sides what they wanted.  Bob eventually gets his money back, and the manager keeps Bob as a customer.  Win/Win!

So when a customer or client complains or wants their money back, how do you handle it? Do you know the lifetime value of that customer?  Do you work at getting him/her back the next time?  Part of creating loyal customers is how you respond in “recovery mode” when there are problems.  Understanding the value of the customer can help you make intelligent and reasonable decisions to get the customer to come back next time – every time.

A quote worth repeating…

“Customer loyalty isn’t about a lifetime.  It is about the next time – every time!”
— Shep Hyken, CSP